FocusWeak demand plagues Asia ABS market

?xml:namespace>SINGAPORE (ICIS)--Weak demand continues to curb trades and weigh on prices of acrylonitrile-butadiene-styrene (ABS) in Asia, market sources said on Monday.

ABS prices held steady in the low $1,800/tonne (€1,440/tonne) CFR (cost and freight) northeast Asia (NE Asia) in June, after tumbling from this year’s peak at around $2,200/tonne CFR NE Asia in March, according to ICIS.

External demand for Asian-made products has significantly weakened, with Europe – a major export market for the region – deep in debt crisis. This has led to a sharp decline in consumption of resins, including ABS.

ABS is a resin used to manufacture toys, consumer electronics, office equipment and is used in automotives and construction sectors as well.

“Demand in China remains weak and resins prices are hovering in the low in $1,800s/tonne,” said a Hong Kong-based trader.

While the markets appeared to have stabilised somewhat over the weekend after Spanish banks managed to secure some bailout funds, ABS market players anticipate that there could be further volatility in the energy and petrochemical markets.

Energy futures rose above $86/bbl on Monday after plunging to the low-$80/bbl levels at one point last week. However, ABS prices showed limited signs of improvement so far.

ABS players in Asia are bracing for a weaker-than-expected seasonal pick-up in manufacturing activity in the key China market in the third quarter, as the county receives fewer orders for finished goods.

Europe, which is saddled by mounting debts, and the US, which continues to exhibit economic weakness, are major markets for Chinese exports.

“End-users have limited orders for finished goods, and hence, demand for ABS is likely to remain weak in the near term,” said a Taiwan-based producer.

Meanwhile, China’s economy is also weakening, fuelling concerns that the global economic growth might be derailed.

“China is slowing down and the rest of Asia is also feeling it. Demand for resins, including ABS, has been waning significantly over the past month,” said a resins trader in Singapore.